With Brexit looming, more is unknown than known with British economy, trade agreements

Jan 28, 2020

3 min


Although it has been in the works since June 2016, the transition phase of Great Britain’s decision to leave the European Union (EU) — more commonly known as “Brexit” — is set to take place on Jan. 31. It is a date that will most likely leave a ripple of economic uncertainty in the United Kingdom in its wake as the British prepare for total independence at the end of the year. 


“Brexit has created so many new unknown variables. It can be profoundly disruptive to England as we know it today,” says Ralf “Don” Keysser, D.B.A., an associate professor in the MBA program at Saint Mary’s University of Minnesota.


Keysser predicts a negative short-term impact to the British economy, whereas the long-term perspective is still hard to predict until new free trade agreements with Europe and the rest of the world are established. 


Keysser does not see a clear-cut benefit to the U.S. establishing a free trade agreement with the U.K., simply based on the lack of British imports in the American market, other than maintaining political closeness. 


“It’s going to be a shock to the system. England will not be the England that it has been. There’s a lot of speculation, because we’ve never had a country pull out of the EU before, so it’s kind of an unknown. And it’s so highly politicized that it’s hard to get an objective analysis of what it’s going to look like.”


Keysser points to a Toyota plant in South Derbyshire that supplies most of its output to countries in the EU through a tariff-free treatment. With Brexit going into effect, the factory may have to vastly reduce its output. Still, the workers in that community overwhelmingly voted to leave the EU.


“This is a good example of how people will vote against their economic self-interests for ideological reasons,” Keysser says. “There’s a lot of ideology behind the Brexit vote: anti-immigrant, anti-Europe, pro-nationalist views that very much echoed President Trump’s appeal.”


There are a few reasonably good projections, Keysser says, to make about the impact on inflation, unemployment, and economic trends — and none of them look good for Britain. One just has to look at the British pound, which has steadily been losing value to the dollar and euro over the years. In addition, several banks decided to either move from London or expand into other markets within the EU as soon as the Brexit results were announced, which could cost the British capital its status as of the world’s premier financial centers.


“I see a gradual diminution of the financial business that’s been a mainstay of London,” Dr. Keysser says. 


On top of that, there is a real fear of Scotland and Northern Ireland wanting to leave the U.K. in favor of establishing their own independence and returning to the EU. The last time Scotland voted to leave the U.K. in 2004 it only passed 55% to 45%.


“That could be the beginning of the end of the United Kingdom as we have known it,” Keysser says. 


The news might not be entirely bad out of Brexit. For international tourists, especially those from the U.S may be able to take advantage of the dollar’s exchange rate with the declining pound


Do you want to know more about the possible economic ramifications of Brexit? Are you a journalist covering this topic and interested in an interview? That's where we can help.


Ralf Keysser, D.B.A., has been an active investment banker and business finance consultant for 35 years. He also serves an associate professor for the MBA program at Saint Mary’s University of Minnesota. To book an interview with him, simply click on his icon above to access his contact information.



You might also like...

Check out some other posts from Saint Mary's University of Minnesota

3 min

Unprecedented levels of partisanship vitriol threatens the health of democracy in U.S., globally

Voter-based political parties have played an integral role in American politics since their formation in the 1790s, yet it is difficult to remember any other time in history — other than perhaps the 1850s — when the level of divisiveness was this high and the polarity this profound between Republicans and Democrats.  To add more fuel to the fire, the anti-democratic actions against the rule of law by President Donald Trump have become a primary threat to democracy in the U.S., said David Lynch, Ph.D., a professor of History and Social Sciences and Political Science program coordinator at Saint Mary’s University of Minnesota.  The same action are also threatening how the government works and delegitimizing and undermining institutions that make and enforce laws,Lynch added. Those institutions include formal ones such as Congress and the political parties themselves, as well as less formal entities, such as the traditional news media.  “You have to have free, fair, open media in order to have a democracy. If you do not have a free press, you do not have a democracy,” Dr. Lynch said. “And similarly, you need to have the rule of law where laws are carried out not for political ends, but based on the laws.” The recent impeachment proceedings were an attempt to curtail these actions, but the partisan response to the Senate’s impeachment trial allowed the violation of democratic norms to be rewarded, said Dr. Lynch. Furthermore, politicians who react strongly to anti-democratic actions threaten to further delegitimize the government, such as Trump’s refusal to shake the hand of House Speaker Nancy Pelosi, a Democrat, at his most recent State of the Union address and her subsequent action of tearing up his speech.  “That helps both sides reinforce their own position that the other side is less legitimate and that we shouldn't cooperate with somebody like that,” Dr. Lynch said. Dr. Lynch pointed to how the indices that measure the health of democracy both in the U.S. and abroad have all gone down since Trump won the 2016 election. In addition, the most recent Economist Intelligence Unit’s Democracy Index reflected the worst registered global democracy score since its inception in 2006. In that report, the U.S. received a score of “flawed democracy.” Traditionally, the U.S. democratic system has been able to regulate such extreme partisanship before election day by not nominating candidates that violate democratic norms or are far from the ideological center. On election day, overly partisan candidates are vulnerable in swing districts and swing states. That ability for the public to express its collective voice, though, has eroded over the years as the number of swing districts has dwindled.  "When people view through a partisan lens, it changes the incentives that elected officials have because they may be rewarded for partisan but anti-democratic actions,” Dr. Lynch said. “It also changes how average people view this whole debate.” To demonstrate the current political scene in the U.S., Dr. Lynch alluded to a 2017 study conducted by a group of political scientists at Yale University in which experimental surveys were sent to Venezuelans to see to what degree they would be willing to accept a less democratic candidate if he or she was a member of the political party they affiliated themselves with. The answer was quite a large degree. “The big message here is you can't necessarily rely on the public just to vote out an anti-democratic candidate because they might get a partisan advantage from that anti-democrat,” Dr. Lynch said.  Are you a journalist covering this topic and interested in an interview? That’s where we can help. David Lynch, Ph.D., professor of History and Social Sciences and Political Science program coordinator, has taught political science at Saint Mary’s University of Minnesota since 1996. Dr. Lynch has also written over a dozen chapters on international relations, international political economy, and American foreign policy, including the chapter on trade in the United Nations Association of the USA’s “A Global Agenda” from 1996 to 2005.  Dr. Lynch is an expert in political science, political economies, and international relations. He is available to speak with the media. To arrange an interview with him, simply click on his photo below to access his contact information.

3 min

Entrepreneurship expert: New Americans vital to U.S. economy

In the United States, there is a long history of marginalized communities being extremely entrepreneurial. These communities were driven, in large part, by the desire to meet their own ethnic, religious, and cultural needs, according to Christine Beech, D.M., the Dr. Jon and Betty Kabara Endowed Chair in Entrepreneurship and Innovation at Saint Mary’s University of Minnesota.  In the mid-19th century, more than 100 hospitals were founded by the Jewish community to fight anti-Semitism in medical school appointments and meet patient needs of having kosher options during the hospital stay.These opportunities were not available in the existing network of mainstream hospitals.  Similarly, in the beginning of the 20th century, Irish Catholic immigrants began establishing a network of parochial elementary schools as a way to preserve their faith and culture and allow children to learn about their faith in school, Dr. Beech said. These two initiatives, led by immigrant groups, helped establish networks of schools and healthcare institutions that served a social good in their communities while generating jobs and stimulating the economy. In addition, there is a long line of entrepreneurs in the African-American community who combatted racial discrimination through new businesses because they were marginalized from the mainstream economy, Dr. Beech said. Examples of these entrepreneurs include Madam C.J. Walker, who invented a line of hair care products to serve the needs of her community, and Charles Clinton Spaulding, who developed the largest African-American business in the early 20th century specifically serving the insurance needs of the African-American community. In modern times, one of the largest marginalized communities in the U.S. is comprised of new Americans, many of whom are immigrants and have developed culturally responsive businesses.  Although current policies are set in place to curtail U.S. immigrants, it is important to remember that the country could potentially lose an entire segment of the population that has been vital to the economy, Dr. Beech said. Beech pointed to a 2015 study from the Kauffman Foundation which mentioned that 40% of the Fortune 500 in 2010 were companies founded by an immigrant or the child of an immigrant. Nearly 30% of all new businesses started in 2014 were started by immigrants, Dr. Beech said, according to a related study from the same foundation. “We've been able to see constant growth and diversity within our economy that's been very healthy for us,” said Dr. Beech, who also serves as the executive director of the Kabara Institute for Entrepreneurial Studies at Saint Mary’s. “There's a narrative that says that the immigrant community is coming here to find work. But in fact, when we look at the data, a significant portion of them are actually creating jobs and starting businesses.” Dr. Beech added three primary reasons for these continued statistics indicating significant immigrant entrepreneurship: The drive to be independent A desire to meet their communities culturally specific needs A response to societal biases that hinder success within the mainstream workforce “Those migrant communities often develop their own businesses, almost like a subset of the economy, where they can't be marginalized, where they're actually taking charge of their own economic well-being,” said Dr. Beech.  When it comes to knowing the overall impact of the immigration policies on the economy, there will be a natural lag in the data — possibly as long as five years — given how much time it typically takes for immigrants to establish businesses after arriving in a new country, Dr. Beech said.  Are you a journalist covering this topic and interested in an interview? That’s where we can help. Christine Beech, D.M., has had a career that encompasses academics, entrepreneurship, military service, and consulting. She has been a faculty member in the business department at Saint Mary’s University since 2017 and is the executive director of the Kabara Institute for Entrepreneurial Studies. Before joining Saint Mary’s University, Dr. Beech owned her own consulting business in the Washington, D.C., area for many years. Before that, she worked as a corporate entrepreneur where she led the development of a multimillion-dollar business line for a global consulting firm. Dr. Beech is an expert in entrepreneurship, social entrepreneurship, and women entrepreneurs. She is available to speak with the media. To arrange an interview with her, simply click on her photo below to access her contact information.

3 min

United Nations’ Sustainable Development Goals fall behind initial hopes, lacks needed funding

In 2000, United Nations member states adopted eight Millennium Development Goals (MDGs), which featured a number of ambitious global initiatives, such as eradicating extreme poverty and hunger, and achieving universal primary education in all countries around the world.  As these goals were extremely aspirational, most were far from met by the target date. However, by 2015 significant progress was made in a few areas, such as increased official development assistance (foreign aid), reduced trade barriers for developing country exports, and new debt-reduction strategies for some of the heaviest indebted countries. By the target date of the MDGs, the most notable outcome was the number of people living in extreme poverty around the world had been reduced by 50% since 1990.  To keep the sustainable development agenda moving forward, at the end of 2015, the United Nations member states adopted 17 new Sustainable Development Goals (SDGs) to be met by 2030.  Since the adoption of the SDGs in 2015, some progress has been on two of the SDGs: eliminating preventable deaths among newborns and children under the age of 5, and getting children into primary schools. These are both important initiatives and progress should be celebrated, says Matt Bluem, assistant dean of graduate programs and MBA director of Saint Mary's University of Minnesota's School of Business and Technology. Unfortunately, progress on the other 15 goals has not kept pace. With just 10 years until the target date for meeting all 17 SDGs, it is becoming increasingly clear that most of these goals will not be met.  According to the UN, the biggest challenge in meeting the SDGs is funding. An additional $2-3 trillion is needed to help meet funding requirements. A recent report by the Brookings Institution states that sub-Saharan Africa alone would need hundreds of billions of dollars in additional financial support every year in order to meet the SDGs by the target date of 2030, Bluem says.  U.N. Secretary-General António Guterres has argued that public investment by governments is not enough, insisting that private industry is going to need to get involved. To meet the aggressive SDGs, the private and public sectors will need to work together to bring about the investment and policy change. In order to encourage governments and the private sector to put the resources and effort necessary into meeting the SDGs, it is imperative to let world leaders know that goals such as the SDGs are important to the international citizenry, Bluem says.  Are you a journalist covering this topic and interested in an interview? That’s where we can help. Matt Bluem, Ph.D., assistant dean of graduate programs and MBA director, has taught business and marketing courses at Saint Mary’s University of Minnesota since 2008. Prior to Saint Mary’s, he worked in both the banking and the nonprofit sectors, most recently with a non-governmental organization (NGO) with operations in more than a dozen countries.  Bluem is an expert in political and economic development and is available to speak with media. To arrange an interview with him, simply click below to access his contact information.

View all posts